An economic giant’s Achilles heel
A year ago, Nick Carey went on a road trip around America for a project called “Route to Recovery” that took him to places hit hardest by the recession. Nick went to Saginaw, Michigan, this time for a follow-up special report on the manufacturing sector and structural unemployment: “Is America the sick man of the globe?”
One of the characters he met was Olen Ham, a retired GM worker and UAW member who is among the last of those who took part in the historic “Sitdown Strike” in 1936 that he says helped create America’s middle class. You can hear from Olen in this video:
Manufacturing has borne the brunt of the lay-offs in recent years, as this graphic shows:
Here’s another graph that shows how unemployment and manufacturing are closely linked.
And what did America do instead of build things? Finance. Former Ohio Attorney General Richard Cordray (who failed to win reelection in November) has described the credit binge of recent years as a “Roman orgy” of debt. Our last graphic shows how the financial sector has taken over from manufacturing since the 1980s.
One of the biggest names in finance put it like this:
“Over the past 20 years we have simply borrowed more money in order to prosper,” said Bill Gross, co-chief investment officer of the world’s biggest bond fund manager PIMCO. “We forgot that the more stable and safe way to go is to make things.”
“Now we’re paying the price.”
To read Nick’s special report in multimedia PDF format, click here.